Young professional reviewing a contract on a computer screen, representing the importance of clear contract drafting to avoid contra proferentem disputes in Ontario and BC

Contra Proferentem in Ontario and BC: How Courts Resolve Ambiguous Contract Language

Date: June 10, 2026

When a contract's meaning is genuinely unclear, courts in Ontario and British Columbia do not flip a coin. They apply a structured approach to interpretation, working through the text, the parties' intentions, and the surrounding circumstances before reaching for a rule of last resort. That rule is contra proferentem: ambiguity in a contract is resolved against the party that drafted it.

For businesses and individuals in Ontario and BC who draft standard form agreements, commercial contracts, or any agreement where the other side had limited ability to negotiate the language, contra proferentem is a real and recurring litigation risk. Understanding when it applies, which clauses attract it most often, and how to draft around it is essential to protecting the value of the agreements you rely on. For context on what happens when a contract dispute reaches litigation, see our overview of breach of contract claims in Ontario.

What is contra proferentem?
Contra proferentem is a Latin phrase meaning "against the offeror." In contract law it directs courts to resolve any genuine ambiguity in a contract against the party who drafted it. The rationale: the drafter was in the best position to use clear language and should bear the consequences of failing to do so.

It is a principle of last resort, not a first response to unclear language. Courts apply it only after reading the contract as a whole, considering the parties' intentions at the time of signing, and reviewing the surrounding circumstances. Where those tools resolve the uncertainty, contra proferentem does not come into play. Where they do not, it can determine the outcome of the dispute.

When courts in Ontario and BC apply the contra proferentem rule

Courts in Ontario and BC follow the same structured approach to contract interpretation before reaching contra proferentem. The Supreme Court of Canada's guidance in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 is binding on courts in both provinces and establishes that contract interpretation is a holistic exercise, looking at the words in context rather than in isolation.

The interpretive steps courts follow before applying contra proferentem are:

  • Read the contract as a whole, giving words their ordinary meaning in the context of the agreement
  • Consider what a reasonable person in the position of the parties would have understood the language to mean at the time of contracting
  • Review the surrounding circumstances and factual matrix to determine whether context resolves the apparent ambiguity
  • Consider whether the contract contains other provisions that clarify the ambiguous term by implication

Only if genuine ambiguity remains after this analysis does contra proferentem become relevant. Courts are reluctant to invoke it because it can produce a result that neither party intended: the goal of contract interpretation is to give effect to the parties' actual agreement, and contra proferentem is a blunt instrument for doing so.

Contra proferentem is most powerful in standard form contracts where one party drafted the agreement and the other had little ability to negotiate the terms. Courts in both Ontario and BC are more likely to apply it where the inequality of bargaining power means the non-drafting party could not realistically have corrected the ambiguity, and less likely to apply it where sophisticated parties negotiated the language at arm's length.

Which contract clauses attract contra proferentem most often

Not all ambiguous contract language carries the same risk. Certain types of clauses generate contra proferentem arguments with particular frequency in Ontario commercial litigation.

Limitation of liability clauses Clauses that restrict one party's liability to "direct damages," "reasonable costs," or other undefined terms are among the most frequently litigated. Where "direct damages" is not defined, a court may interpret the limitation narrowly against the drafter, allowing the other party to claim losses the drafter intended to exclude.
Exclusion clauses Clauses that purport to exclude liability for certain types of loss or certain events must be clearly drafted to be effective. Courts apply the rule that exclusion clauses are construed strictly, and contra proferentem reinforces this: any ambiguity about whether a particular loss falls within the exclusion is resolved against the drafter.
Indemnity provisions Indemnity clauses that require one party to cover the other's losses or legal costs must clearly define the scope of the obligation. Vague indemnity language, such as indemnifying against "any claims arising from the agreement," can be interpreted broadly against the drafter where the scope is disputed.
Termination and notice clauses Employment contracts and commercial agreements frequently contain termination provisions with conditions or notice requirements. Where the conditions for termination are ambiguous, courts may interpret the termination right narrowly against the drafter, making it harder to terminate or reducing the permitted grounds.
Non-compete and non-solicitation clauses Restrictive covenants that are ambiguous about their scope, duration, or geographic reach may be interpreted against the drafting party. Where a non-compete clause could reasonably be read as broader or narrower, the narrower interpretation favourable to the non-drafting party may prevail.
Discretionary powers Clauses that grant one party "discretion" or "sole judgment" without further definition can be interpreted to impose an implied good faith obligation or to limit the scope of the discretion against the drafter where the language is genuinely unclear about how that discretion may be exercised.

Contra proferentem in practice: three contexts in Ontario and BC

Commercial contracts

In supply agreements, service contracts, and distribution arrangements, ambiguous liability caps, warranty exclusions, and payment terms are the most common sources of contra proferentem arguments. A supplier's contract that limits liability to "direct damages" without defining the term creates uncertainty about whether consequential losses, lost profits, or other categories of loss are excluded. Courts resolving that ambiguity against the drafter may allow claims the drafter believed were excluded, potentially exposing the drafter to significantly larger liability than intended.

Commercial leases

Landlords who draft standard form commercial leases are the most common target of contra proferentem arguments in real estate disputes. Ambiguous clauses about repair obligations, permitted use, renewal rights, and landlord discretion over signage or alterations are regularly litigated. A clause granting the landlord "discretion" over tenant alterations without defining the standard for that discretion may be interpreted to impose objective reasonableness requirements against the landlord-drafter, narrowing the scope of the discretion.

Shareholder agreements

In closely held corporations, shareholder agreements drafted by one party with the others having limited negotiating input are a fertile ground for contra proferentem arguments. Ambiguous language about profit distribution, buyout triggers, valuation methodology, and exit rights can be interpreted against the drafting party where the other shareholders had little ability to revise the terms. A well-drafted shareholder agreement defines each of these concepts precisely to prevent the ambiguity that invites the rule. See our guide to shareholder agreements in Ontario and BC for what a properly drafted agreement should cover.

In a contract dispute where the other side is arguing the language means something different from what you intended?

Where you drafted the contract, contra proferentem may be working against you. Get advice on how courts are likely to interpret the disputed language and what your options are before the dispute escalates further.

Call: 1-800-771-7882 Get Advice on Your Contract Dispute

How to reduce the risk of contra proferentem

The most effective protection against contra proferentem is clear drafting at the outset. A contract that uses precise language, defines its key terms, and addresses the scenarios most likely to arise in the parties' relationship leaves courts with far less room to apply the rule.

Define key terms explicitly Terms like "material breach," "reasonable efforts," "direct damages," and "discretion" should be defined in the agreement rather than left to their ordinary or legal meaning. A definitions section that addresses the terms most likely to generate disputes eliminates the ambiguity that invites contra proferentem.
Draft limitation clauses with precision If you intend to exclude certain categories of loss, name them specifically. A clause that excludes "consequential damages, lost profits, and loss of business opportunity" is harder to challenge than one that excludes only "indirect damages." The more precisely the exclusion is stated, the less room there is for interpretation against the drafter.
Avoid relying on generic templates Standard templates often contain language that made sense in a different context or for a different type of transaction. Adapting a template to the specific deal without revising its language to match the parties' actual intentions creates gaps that invite dispute. Each significant agreement should be reviewed and tailored to the transaction.
Address likely dispute scenarios in the drafting Think through the most likely sources of disagreement in the relationship and address them explicitly. If the contract involves ongoing services, address what happens when performance falls short. If it involves discretionary decisions, define the standard against which they will be measured. Anticipating disputes in the drafting prevents them from being decided by a court.
Negotiate and document the parties' shared understanding Where contract language is the result of negotiation, document the agreed interpretation in the contract itself or in a side letter. A recital or definition that records what the parties understood a term to mean reduces the scope for a court to apply contra proferentem by showing that the language was agreed rather than unilaterally imposed.
Have the contract reviewed before signing Having a commercial litigation lawyer review the agreement before it is signed identifies clauses that may be interpreted against you and provides the opportunity to correct them at no litigation cost. The cost of review is consistently lower than the cost of a dispute over ambiguous language.

Dealing with a contract dispute where the meaning of a clause is in dispute?

Whether you are the drafter facing a contra proferentem argument or the other party seeking to enforce a favourable interpretation, the outcome depends on the specific language and context. Get advice on where you stand.

Understand Your Position in the Dispute Or call us: 1-800-771-7882

Contra proferentem in British Columbia

Contra proferentem is a common law principle that applies equally in BC. BC courts are bound by the same Supreme Court of Canada authorities as Ontario courts, including Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 and Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, which addressed standard form contract interpretation and confirmed that contra proferentem applies to resolve genuine ambiguity against the drafter where the contract is a standard form that the other party had no real ability to negotiate.

BC courts apply the same structured interpretive approach: read the contract as a whole, consider the surrounding circumstances and the parties' shared intentions at the time of contracting, and invoke contra proferentem only where genuine ambiguity remains. The BC Court of Appeal has applied the rule consistently across commercial contracts, insurance policies, commercial leases, and employment agreements drafted on a standard form basis.

One area where BC practitioners see contra proferentem arguments with particular frequency is insurance contracts. The Insurance Act, RSBC 2012, c 1 governs insurance contracts in BC, and courts have consistently held that ambiguous policy language is interpreted against the insurer as drafter. The same principle that protects policyholders in insurance disputes applies to the non-drafting party in any commercial contract where the language is genuinely unclear.

For BC businesses, the practical advice is identical to Ontario: precise drafting, defined terms, and pre-signing legal review are the most effective protections against contra proferentem arguments. The rule is the same in both provinces because it derives from the same common law foundation. The risk of drafting ambiguous standard form contracts is equally real on either side of the provincial border.

Practical takeaways

Contra proferentem resolves genuine contractual ambiguity against the drafter. It is a principle of last resort applied in Ontario and BC after courts have exhausted other interpretive tools including reading the contract as a whole and considering the surrounding circumstances.
The rule applies most strongly to standard form contracts where one party drafted the agreement and the other had limited ability to negotiate. It applies less readily to arm's-length contracts negotiated by sophisticated parties with equal bargaining power. This is the same standard in both Ontario and BC.
Limitation of liability clauses, exclusion clauses, indemnity provisions, and termination clauses are among the most frequently litigated sources of contra proferentem arguments in Ontario and BC commercial disputes.
The primary protection is clear drafting: define key terms, address likely dispute scenarios explicitly, and avoid relying on generic templates that may not reflect the parties' actual intentions in the specific transaction.
Having a lawyer review commercial agreements before signing identifies ambiguous clauses and provides the opportunity to correct them before a dispute arises. The cost of review is consistently lower than the cost of contra proferentem litigation.
Where a contract dispute has already arisen over ambiguous language, the analysis of whether contra proferentem applies depends on the specific wording, the surrounding circumstances, and what a reasonable person in the parties' position would have understood the language to mean.

Frequently asked questions

What is contra proferentem in Ontario contract law?

Contra proferentem is a rule of contract interpretation that resolves genuine ambiguity against the party who drafted the contract. The drafter was in the best position to use clear language and bears the consequences of failing to do so. In Ontario and BC it is a principle of last resort applied after other interpretive tools have been exhausted. The Supreme Court of Canada's guidance in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 governs courts in both provinces.

When do Ontario and BC courts apply the contra proferentem rule?

Courts in both provinces apply contra proferentem only after reading the contract as a whole, considering the parties' intentions at the time of contracting, and reviewing the surrounding circumstances. It is invoked only where genuine ambiguity remains after that analysis. A merely imprecise or inelegant clause that has a clear meaning on its proper interpretation does not attract the rule.

Does contra proferentem apply in BC as well as Ontario?

Yes. Contra proferentem is a common law principle that applies in all Canadian common law provinces including BC. BC courts are bound by the same Supreme Court of Canada authorities as Ontario courts and apply the same structured interpretive approach. The rule is particularly well established in BC insurance contract disputes but applies equally across commercial contracts, leases, shareholder agreements, and any other agreement drafted on a standard form basis.

Does contra proferentem apply to all contracts in Ontario and BC?

Contra proferentem applies most strongly to standard form contracts drafted by one party with little negotiating input from the other. It applies less readily to contracts negotiated at arm's length between sophisticated parties with equal bargaining power, though ambiguous language in any contract remains a risk for the drafter in both provinces.

What is an example of contra proferentem in a commercial contract?

A limitation of liability clause restricting claims to "direct damages" without defining the term is a classic example. Where the scope of "direct damages" is genuinely ambiguous, a court may interpret the limitation narrowly against the drafter, allowing the other party to claim losses the drafter intended to exclude. Exclusion clauses, indemnity provisions, and termination clauses generate similar arguments.

How can businesses protect themselves from contra proferentem?

The primary protection is precise drafting: define key terms, address likely dispute scenarios explicitly, name excluded categories of loss specifically, and avoid generic templates that may not match the parties' actual intentions. Having a commercial litigation lawyer review agreements before signing identifies ambiguous clauses and provides the opportunity to correct them at no litigation cost.

In a contract dispute where the meaning of a clause is being argued in Ontario or BC? Tell us what's happening.

Whether you drafted the contract and are facing a contra proferentem argument, or you are seeking to enforce a favourable interpretation of language that the other side drafted, the outcome depends on the specific wording, the surrounding circumstances, and the applicable legal framework. Achkar Law advises businesses and individuals across Ontario and British Columbia on contract disputes and breach of contract claims. We will assess the language in dispute and advise on the strongest available interpretation and litigation strategy.

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